Multinational insurance group RSA has announced that its underwriting profit is “strongly up” at the end of Q3, with a combined ratio of 90%.
RSA reported competitive market conditions in Q3, but said that pricing and underwriting actions have been consistent with loss ratio gains and are improving further in many portfolios.
Despite these favourable conditions, the group’s net written premiums decreased by 3% to £4,663 million for the first nine months of the year.
In Scandinavia, premiums reduced 1% to £1,318 million, and Canada also saw a decrease of 1% to £1,248 million.
Meanwhile, UK & International premiums dropped by 6% to £1,998 million, or by 2% excluding the impact of COVID-19.
RSA’s weather costs were 3% of net earned premiums and the loss ratio was 9.0% excluding the estimated COVID-19 impacts of 1.6 points.
However, the attritional loss ratio improved strongly overall on all bases and in each region, and prior year development was positive.
RSA’s tangible shareholders’ equity at 30 September 2020 was £3.35bn, versus £2.91 billion in 2019, with the increase driven by year to date profits, pension movements, and mark-to-market gains.
Balance sheet unrealised gains were £446m (pre-tax), representing an increase of £18m from half year, driven by positive mark-to-market on bond holdings due to declining yields.
In Q3, non-COVID claims frequency was down from last year by up to 36% due to lower economic activity.
Since the half year reporting there have been no material increases in COVID-19 claims reserves outside those relating to business interruption claims in the UK.
In September, RSA increased claims reserves (IBNR) by £62 million net of reinsurance in response to the UK Court’s ruling on the FCA Test Case for business interruption claims related to the pandemic.
The majority of this has been booked as large losses (c.75%) with the remainder booked within the attritional loss ratio.
“RSA’s run of record underwriting results is continuing,” commented Stephen Hester, RSA Group Chief Executive.
“The Group recorded a Q3 discrete combined ratio of 90%, despite providing fully for the UK BI Court ruling in September. While COVID-19 has held back our profit overall, RSA’s inherent strength and the improvements we have made are driving the business forward in a pleasing manner. The outlook for continued underwriting improvements remains positive.”
